Per Diem Interest Calculator for a Mortgage

What is per diem on a mortgage? Can the seller pay it?

Home buyers at closingWhen you close or settle your loan, you will pay interest on the loan from the settlement date to the end of the month. Per diem interest is a fancy way of saying you are paying interest per day or per diem.

If you close on the 15th day of the month, you will pay the lender 15 days interest, assuming there are 30 days in the closing month. 

If you close on the last day of the month, you will pay the lender 1 day interest. The calculation includes the closing day in the calculation.

Think of per diem interest at settlement as an interest only mortgage payment.

What Is Per Diem Interest on a Mortgage Loan?

When you sign for a mortgage or any other loan, you pay interest on the loan along with the principal. The lender charges you interest on the loan for the time you have the loan. Your per diem cost starts on the day you sign the loan papers.

The term per diem interest means daily interest. 

Rotating question markHow to Calculate Per Diem Interest

The per diem interest formula is very simple. Multiply the loan amount by the interest rate, then divide the total by 365 days. The result is the per diem cost of the loan. Now multiply the daily interest rate by the number of days in the settlement month. Here's an example of the calculation:

Loan Amount X Interest Rate = Total Interest Number of Days in a Year Daily Interest Cost Multiply by = The number of days owed Total per diem interest paid
$100,000 3.00% $ 3,000 365 Days $ 8.22 X 16 Days = $ 131.51

Can I Avoid the Per Diem Interest Charge?

It's unlikely that a lender will pass on the per diem interest cost.

Try Our Amortization Calculator

Use our amortization calculator and see how fast you can payoff your mortgage with an extra payment each month. A little extra with your mortgage payment can save you a ton of interest.

 
       
 
 
 
 
  PER DIEM INTEREST CALCULATOR  
 
  Loan Amount  
 
  Interest Rate  
 
  Annual Proration  
 
  Number of Days  
 
  Daily Interest  
 
  Result